401K/IRA and Health Saving Account - 2CoolFishing
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Old 01-22-2018, 07:53 AM   #1
BullyARed
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401K/IRA and Health Saving Account

When you retire and withdraw money from your 401K/IRA, it will be counted as your income. However, if you put it in your Health Saving Account to the allowable limit, it looks like you will be even out without paying any tax to the withdrawn amount. Fro example, the limit for HSA contribution is $5,000. You withdraw $5,000 in your 401K/IRA and place it in your HSA account. You will be taxed on $5,000 as income and at the same time you can deduct $5,000 for HSA contribution. Is this correct? It seems a way for you to reduce your tax once you retire and use your 401K or IRA for your non covered medical expenses.
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Old 01-22-2018, 08:28 AM   #2
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You can only contribute to your HSA if you have an approved health plan. Once you retire I don't think that would be the case unless you are buying one on the open market. Medicare doesn't qualify.
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Old 01-22-2018, 08:38 AM   #3
crabtrap
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Correct me if I'm wrong, but I believe you can only fund your HSA with your IRA once in your lifetime. I checked into that a while back. I wish I could do this yearly!
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Old 01-22-2018, 08:44 AM   #4
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Thanks. What if you already have an HSA account that you opened with a previous employer and now you buy your own healthcare. Can you continue contributing to that account with 402K/IRA?
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Old 01-22-2018, 11:32 AM   #5
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Your HSA account is yours, you just have to follow the rules IRS puts out. You have to have a qualifying high deductible insurance plan to contribute to the HSA whether its through an employer or one you buy on the open market. Like I said, its just a one time deal so the max you could contribute in any given year is the maximum allowed (the amount is only around 4500 this year for me). Its a loophole that one can use in a bind to get them into a low tax bracket if they were close. Everything is in flux (changes as the political wind blows) so just keep it in mind when tax planning for the year. BTW-I'm not a tax consultant so take my post for what it is worth...that of a Google and read it kinda taxpayer LOL

For tax savings, I max out my 401K contribution (over 18K currently) and my HSA contribution (4450 currently) yearly. The 401K contribution lowers my taxable income A LOT and the HSA contribution also lowers my taxable income then gives me a big chunk in above the line credits. Also, both the 401K and HSA can be invested to grow your nestegg.

Last edited by crabtrap; 01-22-2018 at 11:39 AM.
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